One company's castoffs are another's corporate conquest.
That more or less sums up the circuitous combination of two paper manufacturers with operations throughout South Carolina.
Announced earlier this year, the planned tie-up between WestRock Co. and KapStone Paper and Packaging Corp. will likely be set in stone later this week. KapStone investors are scheduled to meet Thursday to decide whether to sell the company for $35 a share. It's considered a lock.
The nearly $5 billion deal would bring together a pair of businesses that share a common corporate bloodline.
As the buyer, WestRock is poised to gain a handful of businesses around the Palmetto State that one of its previous buyout targets had once owned, including an industrial fixture that dates back to the Great Depression. Indeed, it was KapStone's purchase of those operations in 2008 that provided the fuel for its own sale a decade later.
The trail began when the former paper giant MeadWestvaco Corp. decided to exit its low-margin enterprises and shift its focus to high-end packaging, specialty chemicals and real estate development. It began selling assets that didn't fit into the new corporate matrix.
The would-be buyers included a fairly new outfit from the Chicago area named KapStone led by paper industry veteran and serial dealmaker Roger Stone of Smurfit-Stone Container fame.
The startup set its growth plan in motion in mid-2008 by snapping up MeadWestvaco’s landmark Cooper River mill, which has been churning out containerboard and other commodity paper products since the 1930s. The $485 million deal also included six assorted forestry businesses around South Carolina.
KapStone later added a plant in Cowpens and a packaging center in Greenville, while also lining up buyout deals in other parts of the country.
The much-larger WestRock, which has plants in Florence, Latta and Spartanburg, also was hot on the acquisition trail, though it was chasing sellers under a different name. The Norcross, Ga.-based company went by Rock-Tenn Corp. until 2015, when it bagged a big-time rival: none other than MeadWestvaco.
The shuffling and reshuffling of paper mills and other corporate assets came full circle nine months ago, when WestRock announced the KapStone buyout. It's as if they're getting the old band back together.
If approved by shareholders later this week, the acquisition is expected to close by the end of year. The transition likely won't be pain-free for KapStone's 6,400 employees. WestRock is projecting it can squeeze $200 million in cost savings from the deal.